PRI signatories pick out top ESG engagement issues

A survey by the UN-backed Principles for Responsible Investment (PRI) has highlighted climate change, executive pay and labour standards in the supply chain as three of the most urgent areas for engagement.

The research was carried out amongst a number of active users of the PRI’s Engagement Clearinghouse platform – an online tool that allows signatories to share and discuss ways to tackle environmental, social and governance (ESG) issues.

The institutional investors that took part manage more than $2 trillion between them, and were each asked to pick out the areas they thought the PRI should focus on over the next three years in terms of engagement.

Climate change topped the environmental section and supply chain labour standards was highlighted as the biggest social issue, while executive pay emerged as the most urgent governance area.

Other important areas for engagement included water, human rights, bribery and corruption, unconventional fuels and board-related fuels.

“The PRI Clearinghouse supports some of the world’s leading asset owners and investment managers to be active owners of the assets in their portfolios, and they have signalled several areas they believe require greater attention by companies over the coming year”, said James Gifford, executive director of the PRI, who spoke to Blue & Green Tomorrow in July in an interview about the role of investors and governments.

He added, “It is clear that a company’s management of ESG issues does play a role in its ability to deliver sustainable returns to its investors, and users of the Clearinghouse recognise that exercising the rights associated with ownership of the assets in their portfolio is a fundamental part of managing, protecting and enhancing the value of those assets for their clients and beneficiaries.”

At the beginning of August, B&GT looked at the PRI in some depth, examining each of the six principles for responsible investment individually, as well as looking to the future to predict how the organisation might influence future investment activity.

By highlighting the most urgent ESG engagement issues now, PRI signatories are able to tailor their investment portfolios as necessary. And in doing so, the organisation can create an inclusive movement that truly inspires institutional investors to align their finances responsibly, ethically and sustainably.